Message from the Procurement Ombudsman

The Office of the Procurement Ombudsman (OPO) was created following the implementation of the Federal Accountability Act, and I was confirmed as Procurement Ombudsman in May 2008. We became fully operational in September 2008 and we are now at the end of our first full year of operations. I am pleased to report that we have made great strides in building trust and confidence among all the stakeholders in public procurement. Our success is reflected in the good working relationships the Office has developed with the supplier community and the government. The feedback we have received from all stakeholders confirms that our dedicated staff is professional, knowledgeable in procurement and impartial; the recommendations we make are reasonable, well thought out, affordable and practical.

We are greatly encouraged by the results of our efforts. Formal follow-up on recommendations normally occurs after two years, but informal inquiries indicate that stakeholders have found our interventions to be very helpful and significant actions have already been taken on recommendations we have made to departments and agencies.

The main objective of the Office is to strengthen Canadians' confidence in public procurement. Parliament has given me, in my role as Procurement Ombudsman, a clear and focussed mandate. When I appeared before the Standing Senate Committee on National Finance on February 12, 2008, the Committee suggested that OPO interpret its mandate broadly. The Chair said: "Let me suggest that you may want to interpret your mandate broadly. You described the procurement processes as broad, with contracting being only a small piece. As Senator Di Nino raised with you, the pre-awarding of a contract – the requests for proposals and other aspects at the front end – is an important area to review." Standing Committee on Government Operations and Estimates members expressed the same sentiments when I subsequently appeared before them.

Procurement means the process related to the acquisition of goods, services or construction services, from the initial concept of a requirement to the completion of all post-contractual actions. The mandate for procurement practices reviews includes all phases in the life cycle of procurement. This entails defining the requirements for goods and services, developing a procurement strategy, soliciting and evaluating proposals, awarding the contract, administering it, completing file final action and closing out the file. The mandate also gives OPO the authority to respond to inquiries and to conduct investigations regarding complaints that meet specific criteria respecting compliance with federal procurement regulations. Thirdly, OPO is responsible for ensuring that an Alternative Dispute Resolution (ADR) process is provided, with the agreement of both parties. The three business lines – Practice Reviews, Inquiries and Investigations, and ADR – are committed to strengthening fairness, openness and transparency in all phases of federal procurement.

Our Office continues to deliver on its promise to maintain an active outreach program. We made presentations on the activities of our Office to suppliers and public servants across the country on more than thirty occasions. We also hosted international delegations from Kenya, China and the Ukraine.

As stakeholders have become aware of our existence and our services, they have increasingly sought our assistance. The Office has received a growing number of inquiries from suppliers. The majority of inquiries are concerns and complaints about procurement-related issues. Initially, many suppliers contacted us to determine why they had not been awarded a contract. Now, many suppliers bring more complex issues to our attention, issues that involve questions of fairness, openness and transparency in the procurement process. For example, they are asking questions about the appropriateness of time lines to bid on Requests for Proposals and other details of the solicitation, evaluation and contract award process.

The Office has chosen to implement a business model that focusses on a collaborative approach to ensure efficient and timely resolution of issues between the government and suppliers. Deputy Ministers in all departments have provided us with key contacts in their organizations, and we have developed good working relationships with them. Our collegial approach to procurement disputes has been very well received, and the results are impressive. Most of the complaints brought to us have been resolved without our resorting to detailed investigations, saving time and effort on the part of both suppliers and government officials. We have only had to conduct a limited number of formal investigations. Suppliers prefer to spend their time managing their businesses, not investigations. Government officials prefer to manage their operations, not disputes.

However, as stated last year, stakeholders should not underestimate our willingness and determination to use all the authority provided by our mandate. If required, the Office will use more powerful tools to investigate and resolve procurement-related complaints and disputes.

Canadians expect the government to take a proactive, balanced and reasonable approach to managing the government's procurement process. We expect departmental managers to identify and assess risks, develop mitigation strategies and target their limited resources to the management of significant risks. By assessing risks and determining controls for public procurement, they can ensure that the procurement system supports, to the highest degree possible, the principles of fairness, openness and transparency.

Two recurring problems requiring immediate attention

In our work this year, we noted two recurring problems that have existed for a long time but now require the immediate attention of senior government officials: incomplete file documentation and poor communication between the government and the supplier community. Both impede the transparency of the federal government procurement processes.

Incomplete file documentation weakens transparency

In our practice reviews and investigations, we repeatedly observed the lack of essential documentation to explain and support the decisions made and actions undertaken. Despite the requirements of the Treasury Board Contracting Policy, the duty to keep accurate records under the North American Free Trade Agreement, as well as departmental manuals and the numerous calls for proper documentation of files by internal audits, the Auditor General and the Gomery Commission, this problem persists and it is troubling.

There are a number of reasons why a properly documented file is necessary. There cannot be transparency and accountability without documentation to support decision making. The numerous stakeholders involved in the procurement process should have the ability and the information necessary to review and understand decision making to ensure that public funds are being properly administered and spent. Lack of documentation on a file also raises questions and often leads to speculation on the integrity of the procurement process.

In some cases, lack of documentation has resulted in unfavourable consequences in both tribunals and courts when government decisions were challenged. In fact, the Canadian International Trade Tribunal found that "maintenance of complete documentation for each procurement is essential to preserving the integrity and transparency of the procurement system." (Re Hewlett-Packard (Canada) Ltd., (2001) C.I.T.T. No. 20 at para. 154.)

Finally, as has been evident to us during our work, a poorly documented file results in a totally unnecessary but significantly increased workload for both the procurement officials and those involved in oversight functions. While the responsibility for documenting files rests with both the managers requesting contracts and the procurement officers, we are also deeply concerned that the managers responsible for reviewing procurement files have not acted upon this long-standing weakness.

It is not enough to repeat that there is a need to properly document procurement files. Concerted efforts must be made to address this issue and to ensure documentation commensurate with the risk to government. This is a requirement of public sector administration that can be made a performance objective in the annual performance agreement of the executive cadre with appropriate recognition or consequences for success or failure to achieve results.

Poor communications negatively affect relations between the government and its suppliers

This issue, which was raised in our 2008-2009 Supplier Debriefings Procurement Practices Review Report, still represents a significant challenge. Much stress and aggravation could be avoided by better communications between the government and the supplier community.

We were repeatedly told by supplier associations and even some Members of Parliament that the government does a lot of consultation where public servants are hearing but not listening. Furthermore, we were informed by individual suppliers of many instances of misunderstandings and miscommunication during their dealings with procurement officials. There is a cost to both parties when there is poor communication and a lack of respect, real or perceived, intended or unintended.

In many of the complaints made to the Office by suppliers, the government's first response has been denial of either the existence of a problem or any responsibility for it. While we understand the need to minimize legal liability, unnecessary denial leads to delays, unnecessary costs and a breakdown of trust between the government and its suppliers. Just as procurement officers expect to be treated with respect, suppliers too are mature partners in the supply management team and should be treated with the same respect.

Given the sheer number of contracts entered into by the government and its suppliers, on occasion, misunderstandings and mistakes by either party do happen. OPO's Alternative Dispute Resolution process provides an independent, inexpensive and non-confrontational mechanism to discuss and resolve disputes. This year, several suppliers requested assistance from OPO to resolve contractual issues with departments. In most cases, satisfactory resolution was achieved by the parties coming together and communicating their positions. However, in two cases, there have been long delays by a department to respond to requests for some form of ADR. While the Department states that it needed time to carry out a thorough process, the delays has caused frustration for the affected suppliers. Details can be found at Case No. 2.

We were informed by government departments that, further to our 2008-2009 Supplier Debriefings Procurement Practices Review, they are taking steps toward improving communication. We are very encouraged by this and will, later this year, conduct a formal follow-up on the management action plans developed in response to the recommendations we made.

Ethics in Federal Procurement

Improving communication and strengthening an ethical environment would strengthen Canadians' confidence in federal procurement. Our business model is less about just following the rules and much more about doing the right thing. Procurement decisions should always take ethical considerations into account. The real question is not just what minimum actions government officials must take to meet a narrowly defined policy or legal requirement, but how those actions ensure that the principles of fairness, openness and transparency are upheld.

As stated in the Bellamy Report of 2005 on the Toronto Computer Leasing Inquiry: "It is widely recognized that public officials have a greater responsibility to uphold ethical standards to protect the public interest." With respect to government procurement practices in particular, the report notes the following:

"In surveying the literature and research on procurement, it quickly becomes evident that a primary focus of professional attention is on policies, procedures, directives, guidelines, techniques, best practices, etc. However, procurement is about more than the technical components. Almost universally, experts offered the view that ethics-related values and principles are the essential foundation of public sector procurement in leading jurisdictions."

As Paul Emanuelli notes in Government Procurement, second edition: "Promoting values-based procurement is a key component to a public institution's system of internal checks-and-balances. This calls for the implementation of mechanisms to enable both self-governance and reporting by individuals and internal monitoring by internal compliance offices within the institution."

Public Works and Government Services Canada (PWGSC) has recognized this need and has in place a strong ethics program, which identifies four values to guide its employees in serving the Canadian public:

• Respect
• Integrity
• Excellence
• Leadership

The goal is to build ethical considerations into the department's approaches, plans and strategies and to embed ethical actions and decision making in employees' daily work. Over 13,000 employees have been trained, and a framework for ethical decision making has been established. We would encourage other departments and agencies to review the PWGSC experience and adopt a formal ethics program to benefit the federal procurement process.

The Office is striving hard to strengthen the confidence of Canadians in public procurement. Small and medium-sized enterprises have expressed their gratitude for our assistance in resolving issues without a lengthy or costly investigation or the need to go to court when they have contractual disputes with government departments. Departments and agencies are generally supportive of our work, and Deputy Ministers and central agencies have been particularly supportive. We jealously guard our independence, but we are a team player. We have a specific role to play but there are many other important players. We want to thank all of those departments, agencies, suppliers and associations that are working in collaboration with us to promote fairness, openness and transparency in the procurement process.

In Closing…

And finally, on a personal note, I have had the honour and privilege of serving Canadians for more than 33 years in the federal public service. For 28 years, I worked in one of the most respected national audit offices in the world, the Office of the Auditor General of Canada. I then became the first Chief Risk Officer in a federal department and was mandated to monitor and report that the operations of PWGSC were conducted with fairness and transparency. Since May 2008, I have served as Procurement Ombudsman, with a specific mandate to establish an independent, neutral and highly professional office that helps deal with suppliers' concerns as well as ensure that government procurement practices support fairness, openness and transparency. I am proud of what we have created and of our success in promoting better procurement, better government and better value for Canadians.

My career in the public service has provided me with an opportunity to interact with Canadians from all parts of the country and to understand and appreciate the great multilingual and multicultural society we live in. Among the many, many wonderful memories of my career, the two that stand out the most are, firstly, the numerous opportunities I had to appear before the various committees of Parliament and truly appreciate the functioning of the system of checks and balances in a democratic society and, secondly, the opportunity to establish the first Office of the Procurement Ombudsman.

I am planning to retire this year, but I am hopeful that I can continue to contribute to the strengthening of risk management, governance and oversight in some other capacity. The Office has been built on a very strong foundation and I am confident that it will continue to work to improve the public procurement process.

I would like to thank all those with whom I have had the honour of working and all those who have put their trust in me and allowed me to serve on their behalf. I would also like to thank the officials of the Treasury Board Secretariat and the Deputy Ministers, in particular, François Guimont, Deputy Minister of PWGSC, without whose constant support and counsel we could not have achieved the success that we have had.

Shahid Minto MA, LL.B, CA,
Procurement Ombudsman

Date modified:

2018-11-01